PG&E Bankruptcy Opens the Door for Municipal Utilities

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

PG&E’s bankruptcy declaration, liabilities, stock plunge, wrathful legislators, and possible criminal charges put the utility in a life and death situation. Many alternatives face lawmakers and regulators on how to work through the crisis for the company while at the same time attempting to spare ratepayers and to compensate, to the extent possible, victims of the Camp Fire. One alternative could be a growing move toward municipal owned utilities—an issue that PG&E has fought in the past.

Recall Proposition 16 in 2010. The constitutional amendment initiative was funded by PG&E to require a two-thirds vote by local voters before a local government could establish a municipal utility, expand an existing municipal utility, or allow local governments to form community wide clean electricity districts called Community Choice Aggregators (CCAs).

CCAs established by statute in 2002 would allow local governments to buy energy on behalf of their citizens. In part, the idea was for local governments to choose electricity that came from renewable sources.

While some commentators since the bankruptcy declaration have suggested PG&E’s efforts to use renewable energy will be hindered by the utility’s current crisis, in 2010 PG&E was afraid that the debates over energy sources would help lead to more municipally owned utilities, which would result in a reduction of PG&E customers.

The current state of affairs could present an opportunity for creating public power companies if PG&E remains crippled and is in no position to oppose such efforts. From local government’s side, costs and other hurdles must be considered but municipalities do run public power grids and cities within the PG&E region have long discussed the possibility.

But if the company is dissolved or reduced in size and capacity who covers the utility’s liability responsibilities?

The governor, legislators, regulators, local officials, judges and customers must face that question.

Yet, the fear confronted by PG&E nearly a decade ago over losing business to government run power companies could come to fruition quickly in light of the fire woes and the bankruptcy.

PG&E didn’t generate much sympathy when they attempted to cut off the opportunity for public power in 2010. Despite spending $46 million on the Proposition 16 campaign, while opponents barely topped $100,000, Proposition 16 was defeated.

Nearly ten years later, under current circumstances, the threat of municipal utilities is even more real.

 

 

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